On Tuesday, the chairman of the U.S. House of Representatives’ committee on China called for trade restrictions on Changxin Memory Technologies (CXMT), a Chinese memory chip maker.
This request follows China’s recent ban on the sale of certain chips by Micron Technology Inc, a U.S.-based company. The trade dispute between the two largest economies in the world has been intensifying, leading to strong reactions from key lawmakers and the White House.
The White House press secretary dismissed China’s announcement on Micron as lacking factual basis. The White House confirmed that the U.S. Commerce Department is in direct communication with China regarding Micron, a crucial manufacturer of memory chips used in various products.
Senate Majority Leader Chuck Schumer is also discussing the issue with the business community and allies.
However, the Chinese Embassy in Washington and a representative for CXMT have not provided immediate comments. The Commerce Department declined to comment.
Representative Mike Gallagher, who chairs a select committee on China, has been pushing for a tougher stance on China and is the first lawmaker to call for retaliatory action.
He urged the Commerce Department to include ChangXin Memory Technologies on the entity list, preventing the transfer of any U.S. technology to CXMT, YMTC, or other Chinese firms in the industry.
CXMT is China’s leading producer of DRAM memory chips and would likely benefit if Micron is prohibited from accessing the Chinese chip market. Yangtze Memory Technologies Corp (YMTC), another Chinese chipmaker, has already been added to the entity list in December 2022.
Gallagher also emphasized that the Commerce Department should ensure that no U.S. export licenses granted to foreign semiconductor memory firms in China are used to compensate for the loss of Micron.
He urged South Korean allies to take similar actions to prevent such compensatory measures, referring to the experiences of South Korean companies with economic coercion from the Chinese Communist Party.
Samsung Electronics and SK Hynix, both operating memory chip factories in China, did not respond immediately for comment.
Analysts believe that CXMT’s chips are technologically behind industry leaders such as Micron, Samsung, and SK Hynix by two to three generations.
Gallagher’s call for action comes after U.S. chip producing equipment makers had got a amplification from U.S. export overseas control experts, making them able to ship many tools to China than they had previously anticipated.
This clarification from the Commerce Department pertains to the measurement of memory chip features for the application of export control rules.
The measurement of such chips can vary depending on the tools, materials, and design used in their production, leading to ongoing debates among chip manufacturers and buyers.
Meanwhile, on the other side of things, Global financial markets are bracing themselves for potential crises as the impasse over the U.S. debt ceiling looms, posing a threat of depleting the U.S. government’s funds as early as next week.
However, another alarming development is the return of 6% policy interest rates, which is causing significant concerns.
The anxiety of a technical default on the Treasury bills, unless there could be a bipartisan arrangement in Washington to lift the debt ceiling by June 1, is shifting chaos in the short-term market for debt.
The recent auction of 21-day cash management bills, covering early June and totalling $35 billion, saw a high yield of 6.2%, surpassing the Federal Reserve policy rates by more than a percentage point.
Yields for one-month bills are currently just below 5.9%.
Despite the intense political brinkmanship, there are no signs of a substantial breakthrough in the talks as of late Tuesday.
The issue has had a relatively limited impact until this week, but Wall Street stock indices experienced a decline of over 1% on Tuesday, with futures remaining negative ahead of Wednesday’s trading session.
Similar declines were observed in Asian and European markets.